Family left without wheels after dealer drags out ‘lemon’ car refund

Sunday, 24 November 2024

Reliable, economical and roomy: perfect for a family with triplets. But when Nick Beard’s car broke down four times and spent months in a garage, he wanted to give it back. It was the beginning of a legal saga which has only just ended, writes Steve Kilgallon.

In June 2023, when Nick Beard’s car had clocked up a total of 19 weeks under repair, he finally concluded it was a lemon.

Beard had wanted a reliable, economical car for his then 5-year-old triplets, two of whom have special learning needs.

The Peugeot 5008 seemed perfect: until seven months after he bought it, when it broke down for the first time.

It would spend almost half of the next 10 months at various Auckland mechanics, none able to diagnose its problems. During some of those long sojourns on garage forecourts, it somehow acquired dents and scrapes nobody took responsibility for, and after one visit, the gearstick crumbled through UV damage caused by a sunshade being left open.

Beard patiently navigated the legal system to secure a court judgment which ordered the dealer who sold it to him, the aptly-named Jamie Ferrari, to repay him $23,500.

Despite being served a statutory demand, Ferrari initially did not pay, saying his company had shut down. He’s now a manager of another company using the same name and same premises.

After Stuff spoke to Ferrari this week, he wrote a letter of apology and agreed to make a full payment to Beard, who said: “I’m in shock.”

And on Wednesday morning, the funds arrived in Beard’s account. He plans to buy a new car as soon as possible - so that this summer, his young family can finally begin going on trips to the beach, the zoo, and out of town again. It’s been, says Beard, a stressful, drawn-out process that’s caused many a sleepless night.

‘In above average condition’

It was during the Covid lockdown when Nick Beard and his partner David decided it was time to buy a family wagon.

Beard specifically needed a seven-seater with three separate back seats, to safely accommodate individual car seats for his triplets and to accommodate, at times, a nanny and a support worker. Ironically, he also wanted something low maintenance.

There was nothing that met his criteria in Auckland, but online he saw a second-hand, newly-imported Peugeot 5008 being sold by a Christchurch dealer called Chevron Quality Cars.

Chevron’s managing director, Jamie Ferrari, provided an AA inspection report which said the car was “in above average condition for age and mileage” (it had done about 80,000km).

Beard paid $14,999, plus an extra $500 to have it shipped north before Christmas 2022, and at the dealership’s advice, invested a further $3,000 in a warranty with specialist auto-insurers Autosure.

For eight months, all was fine. Then, in September 2022, when Beard was out picking up takeaways for a family dinner, it broke down. The AA jumpstarted it, and Beard drove it back to his West Harbour home. Four days later, it broke down again, and was towed to a local garage, which replaced the battery. That didn’t fix the problem, so it was towed again, to a specialist electrical mechanic.

Three days later, it broke down again, and a charging module was replaced, but as it was being driven away from the garage, the dashboard computer showed further faults. It went for further testing, and then made its first of several visits to the Peugeot North Shore dealership in Takapuna.

For the next three months, Beard had a loan car before Peugeot returned his car just before Christmas 2023, with the instruction that even if the dashboard showed faults, it was safe to drive while they awaited more parts.

But in March, on the way home from a family funeral in Hamilton, the car broke down at Taupiri. It was towed back to Auckland with the family sitting inside it.

In May, it needed another six-week stay at Peugeot, and during that, Beard’s patience finally wore out. He wrote to Ferrari, formally rejecting the vehicle under the provisions of the Consumer Guarantees Act.

Nine days later, however, Ferrari wrote back, saying: “For the length of ownership, kilometres travelled and information provided by Autosure, I’m not accepting your rejection of the vehicle.”

Ferrari went on to say that Autosure had been guilty of poor communication, that he understood how frustrated Beard must be, and the situation was “completely unacceptable” - but it wasn’t Chevron’s fault as they’d only learned of the situation a week earlier (it’s worth noting here that Beard’s insurance policy stated that he had to conduct all repairs through Autosure, not the car dealer).

By now, Beard had turned to Consumer NZ for help.

Advocate Maggie Edwards says she immediately advised Beard to file a claim with the Motor Vehicles Disputes Tribunal (MVDT).

“He came to us in desperation, really,” says Edwards. “It was clear to me that he should have rejected it and asked for a full refund. I could see it in retrospect, but it is different when you are living through it, and you’ve got three young kids … it must have been a nightmare. Because we started off fresh, I could see the pattern - he should have rejected it earlier, but nobody had told him that.”

And that was what the MVDT found when they heard the case in October that year. In his judgment, adjudicator David Jackson said Beard had proven the car wasn’t of acceptable quality, that he was right to lose confidence in its reliability, and that he was right to reject the vehicle - but should have done it much sooner. “Mr Beard will be disappointed … but the right to reject does not last forever and must be exercised within a reasonable time.”

Instead of a refund, he ordered Chevron to replace the car’s computer, or ECU, with a new, genuine part and fix any further faults before returning the car to Beard.

But, after a long delay, it emerged Peugeot no longer made that part. Unbeknown to Beard, Ferrari imported a used ECU from England, which he provided to the mechanics to install. Autosure, however, said Beard had to approve the repair, which Beard reluctantly did.

There were huge problems, Autosure told him later, with fitting the new unit. And, once installed, the car lit up and the windscreen wipers turned on without a key being present.

The mechanics presented a new list of possible reasons for what wasn’t working - which may have guided Autosure into the view that it might be a write-off, telling Beard “it is conceivable the repair costs may exceed the value of the vehicle making it un-economical to repair”. However, Autosure didn’t offer to replace it, because a large amount of the car’s insured value had been spent on the failed repairs. Ferrari was also having the same conversation about writing it off with the Peugeot garage.

In the meantime, Beard - still representing himself - had appealed the MVDT decision in the Christchurch District Court.

The district court decision in September was conclusive: Judge Tom Gilbert dismissed as too restrictive the MVDT’s idea of a “Goldilocks moment” when Beard should have acted, and in effect penalising Beard for his “good fath and tolerance”.

Judge Gilbert said: “The CGA exists to protect consumers who, like Mr Beard, have been sold an item that does not do what it says on the tin and would never have been purchased had they known what was in front of them.”

He ordered Chevron to pay about $23,500, being the price of the car, insurance, excesses and other costs, but declined to order an extra $15,000 in damages sought by Beard.

Consumer NZ’s Edwards said that was a good decision for consumers, as it served to strengthen the Consumer Guarantees Act: “Even Goldilocks had to try three beds.”

Beard himself admits: “I think my downfall has been that I’ve just been too patient … but I’m not a mechanic.”

Beard sent a Letter of Demand for payment to Ferrari. But the day after the payment deadline expired, Ferrari sent him a surprising email.

In it, he told Beard that Chevron Quality Cars 2018 Ltd had, in fact, stopped trading the previous June. Instead, Chevron Quality Cars was now a trading name of 542 Ltd “formed in July with a different shareholding”. He claimed he owned 25% of that new entity (the Companies Office does not list him as a shareholder).

“Chevron Quality Cars 2018 Ltd has no assets whatsoever and will be struck off once IRD is sorted,” he wrote.

“Since the judgement, I have been looking at options to have this paid and none of these include finding $23k immediately.

“Am a chance of finding outside funds to pay back by direct credit at $250 a week.”

When Beard forwarded that email, offering to repay the debt over 92 weeks, to Autosure’s Bruce Davidson, Davidson’s entire response was a shocked face emoji (Davidson did not respond to an email seeking comment).

Beard sent a statutory demand to Ferrari the same day as his $250-a-week offer giving him a 15-day statutory demand to pay (a deadline he didn’t meet).

Ironically, during that time, another email arrived: an automated message from Chevron Quality Cars, offering an extension to his about-to-expire insurance policy.

Chevron Quality Cars’ website remains live, with cars for sale, Ferrari listed as managing director, customer reviews from as recently as last month which mention him by name, and a history page which says it has been “in business for over 35 years”. Ferrari’s own LinkedIn says he’s been managing director of Chevron Quality Cars since April 2014. However, Chevron Quality Cars 2018’s motor vehicle trading licence expired in July.

Ferrari is now working for a company called 542 Ltd, which the Motor Vehicle Traders Register shows has been using Chevron Quality Cars as a trading name since June 2023.

542 Ltd is owned by father-and-son car dealers Graham and Simon Beirne, who are also shareholders in Simon Beirne Ltd, the company which first imported Beard’s car from Singapore. All three companies share the same business address - the car yard at 542 Moorhouse Ave in Christchurch.

Beard says that even though Ferrari told him Chevron Quality Cars 2018 hasn’t traded, he’s been involved in instructing the insurers and mechanics on repairing the car and it’s understood he paid for some of these repairs during that time. “That suggests the company is trading,” he says.

Dealer: I just wanted to help

Jamie Ferrari is upset that Nick Beard contacted Stuff.

“I think this is quite sad considering how much I’ve helped Nick … you really do your best to help someone, and this is just the icing on the cake for a debt that is going to be paid,” he told Stuff on Monday. “If he just communicated we wouldn’t be having this conversation now.”

Ferrari said the $250 a week was a holding offer while he arranged finance, which had now come through and he would pay in full this week.

“He’s a nice guy and I’ve got no problem with him whatsoever, and there’s no bad blood - I was just trying to do right by him in the circumstances,” Ferrari said.

“I was trying to help him, I am trying to do the right thing by helping him, not sticking my head in the sand. Although I am no longer a business owner in any way, I am still a manager, this is still my name and my name is important to me and I want to do right by my clients.”

While Chevron stopped operating the same month Beard rejected the Peugeot, Ferrari said that was completely unrelated; his company had fallen foul of a tough trading environment and was being wound up while he settled with creditors - and that was “no reflection” on the Beard case. “The economy has been pretty hard with the Labour government, the clean car tax and interest rates … and we have definitely felt it in the last three years.”

He said he could have explained that to Beard, but “he doesn’t reply to my emails and doesn't have any dialogue so it is pretty hard to have that conversation with him”.

He said he was now merely an employee of the new company, 542 Ltd, which had nothing to do with the case.

Ferrari felt responsibility for the car’s issues fell principally with the Peugeot garage and the insurers, Autosure. He said Peugeot misdiagnosed the fault and took far too long on repairs and Autosure could have written it off and paid out the policy.

“We do feel for Nick, but we do feel there was some responsibility that wasn’t ours. When he had the car as long as he has, travelled as far as he has, and it has sat in a workshop without any prior knowledge for us for five months, then he has come for us as a reason to try and get his money back … at all times, I have tried to assist Nick as best as I can to pressure Autosure.”

Peugeot North Shore managing director Craig Innes said he was surprised that they were being blamed for any of the car’s issues as they’d had no communications for many months.

Beard says that is typical of his experience, as the other parties blamed each other, leaving him “stuck in the middle”.

Without his money, Beard has tried other avenues to get justice: complaints to the Commerce Commission (alleging unconscionable conduct, which was turned down), to the Ministry of Business, Innovation and Employment (MBIE), and the Motor Vehicle Traders Registrar.

MBIE confirmed it was reviewing a complaint about Chevron Quality Cars 2018 Ltd and 542 Ltd in respect of alleged breaches of the phoenixing provisions of the Companies Act (which prevent companies folding then resuming business immediately with a clean slate).

However, the complaint seems certain to fail as, according to MBIE, the legal definition of a phoenix company involves a company in liquidation due to unpaid debts, a new company with the same or similar name and a common director: none of which apply in this case.

The Motor Vehicles Traders Registrar, Duncan Connor, confirmed Beard’s complaint and said he was “engaging with Mr Ferrari regarding this matter”. But this too seems hopeless: car dealers are banned if they fail to comply with two MVDT orders within ten years - but this appears to be Ferrrari’s first infringement.

Meanwhile, Beard says he has no idea where the car itself is. Ferrari says it’s actually roadworthy, and has been since a month after that final court decision - and is sitting waiting at an Auckland garage. While he admits he technically owns it again, he’s not done anything in case Beard wanted it back.

He wrote to Beard this week saying he sincerely apologised for not paying earlier and said there was “no intention to avoid payment” but his company hadn’t sold a car since last June.

The money landed in Nick Beard’s account on Wednesday lunchtime.

Until Stuff’s call to Ferrari, Beard had seen no prospect of getting his money back - only more legal battles, and another summer without a car for his young family.

“It’s just not fair,” he says. “It has dragged on, and any further litigation is going to drag on. It just moves so slowly, and it's so expensive.

“It's very frustrating, and it's caused me some sleepless nights with anxiety. It's frustrating doing … everything right and getting the decision - but then it’s on me to enforce it. And he's just on the other side, giving me two fingers.”

Until now, the family have only been able to use David’s small company car which doesn’t fit them all at once. “We don’t all go out together. We can’t. One of us has to stay home. It has really messed with family life. We can’t go to the beach. We can’t go to the zoo.”